As we said: "IBM is 'blue,' or 'in the red,' if you prefer -- still grinding lower after a serious gap to the downside last month. The pace of the decline has not slowed to reveal a bullish momentum divergence, so we and Warren Buffett are probably going to see a test of the October/November lows.
"Warren might be taking some questions about IBM this weekend. I doubt if he will be consulting the charts, but we can."
Now we have another gap on the chart, and a fresh look wouldn't hurt.
In this daily candlestick chart of IBM, above, we can see two gaps, or what the Japanese technical analysts and traders call windows. Falling windows (or bearish gaps, if you prefer) are treated as resistance zones until the window is closed. Prices can trade up into the window, but the window will operate as resistance until it is closed. Closing the window requires a closing price above yesterday's low around $158.50. The Japanese candlestick patterns are the quickest reversal patterns that we know of, and today's pattern is not looking like a bottom reversal. The On-Balance-Volume (OBV) line is still pointed down, but the MACD oscillator crossed recently to a cover-shorts buy signal.
In this two-day intraday chart of IBM, above, we can see the price gap of this morning and the steadier prices since the open. Prices are not coming back quickly and the intraday OBV line is neutral. Prices are probably going to need a fair amount of base building assuming today was some sort of climax event.
Bottom line: Buffett changed his valuation of IBM and I expect others could follow suit. Until this works itself through to the price action, the trading will likely be choppy at best.